New data from Auto Trader has revealed that used car prices remain well up on 2021 with year-on-year growth coming in at 19.5 per cent in July.
The firm’s retail price index, based on daily pricing analysis of around 900,000 vehicles, revealed that the average price of a used car was £17,173 in the seventh month of the year.
Despite marking the 28th consecutive month of price growth, the data suggests that prices have finally began to stabilise after the unprecedented levels of growth brought on by the pandemic.
On a month-on-month basis, average prices increased just 0.2 per cent in July.
While still up on the pre-pandemic July 2019, which recorded a 0.4 per cent decline, the figures do at least show that the days of mind-boggling monthly growth have now passed.
They also move to allay some fears from those in the industry that a major drop off in prices is just around the corner.
Auto Trader puts the current softening of prices down to the fact that growth is now overlapping last year’s already very high levels. In July 2021, prices were up at a then all-time high of 14.1 per cent year-on-year.
Prices are still way ahead of previous years with the average cost of a used car more than £3,300 higher than July 2020 a whopping £4,100 when compared with July 2019.
There has also been a drop off in demand with the volume of advert views on its marketplace dipping 5.7 per cent year-on-year. However, they are still up 12.4 per cent compared to July 2019.
Outlook for used car market remains stable
Despite economic uncertainty around the rising cost of living, surging fuel prices, and the Bank of England’s expected hike in interest rates to curb rocketing inflation, Auto Trader’s research offers a more stable outlook for the used car market.
Around 80 per cent of consumers visiting the Auto Trader marketplace who were surveyed in July were at least as confident as they were last year in their ability to afford their next car.
A total of 43 per cent said they were more confident, which is up on the 41 per cent recorded in June, and the 38 per cent in May.
Furthermore, in a separate survey of Auto Trader visitors, three quarters stated they were intending to buy a car within the next six months, which is consistent with the levels over the last year, whilst two in five (40 per cent) are planning on making a purchase in the next two weeks.
Commenting on July’s data, Richard Walker, Auto Trader’s director of data and insights, said: ‘With price growth softening it would be easy to misinterpret the data as a market in reverse or in decline, particularly against the current backdrop of economic uncertainty.
‘But our data, which is based on the largest and most accurate view of the automotive market, shows that is simply not the case.
‘Whilst demand is easing against last year’s once in a lifetime levels, with almost four million new and used car transactions lost since 2020, combined with packed new car order books – and very lengthy waiting times – demand for used cars remains.
‘Coupled with ongoing supply challenges, anyone predicting a crash in used car prices any time soon, will be sorely disappointed.’